① Qualcomm announced on Wednesday that it will acquire AI startup Modular in an all-stock transaction valued at approximately $4 billion, aiming to secure a software technology stack that enables AI models to run across different chips.
② The move positions Qualcomm to challenge the CUDA ecosystem at the software layer, responding to the explosive computing demand driven by generative AI.
June 25 — Qualcomm said on Wednesday it will acquire AI startup Modular in an all-stock deal valued at nearly $4 billion, gaining access to software technology that allows AI models to run across chips without requiring separate code for each processor. Following the news, Qualcomm shares fell as much as 4% during intraday trading.
The move will enable Qualcomm to directly challenge the CUDA ecosystem at the software level. CUDA has long underpinned Nvidia’s dominance in AI, locking millions of developers into the chip ecosystem of the $5 trillion company and building formidable technical barriers.
Under the terms of the deal, Qualcomm expects to issue up to approximately 19.2 million shares of common stock to Modular shareholders. Based on Qualcomm’s closing price on Tuesday, the transaction is valued at $3.92 billion.
Qualcomm is one of the largest chip suppliers to Android device manufacturers globally, but the industry is facing pressure from a memory chip shortage, with surging AI infrastructure demand being the primary cause.
As a result, Qualcomm has been accelerating its push into the data center market in recent years to address the explosive computing demand brought by generative AI. The company has already launched processors and AI chips for data centers and plans to begin shipping by the end of this year.
Emarketer analyst Jacob Bourne said: “Qualcomm is betting that as long as its software can make AI compute faster and use hardware more efficiently, it can carve out a share of the large data center market.”
Modular’s software is primarily used in the “inference” phase of AI models — the actual runtime and computation process after a model is deployed. This area has become a new battleground for chipmakers, particularly as Nvidia seeks to defend against competitors entering the market through custom chips.
The startup positions itself as a “neutral software layer” that can support hardware from multiple chipmakers including Nvidia and AMD.
Qualcomm CEO Cristiano Amon said: “We believe the future belongs to developer-friendly horizontal platforms that can run across multiple computing environments, giving customers genuine choice in how and where they deploy AI.”
The transaction is expected to be completed in the second half of this year. Meanwhile, Qualcomm is continuously increasing its investment in AI and data center businesses to reduce its reliance on smartphone chips, its traditional core revenue source.
At the same time, Qualcomm is also in acquisition talks with AI chip startup Tenstorrent, with the deal valuation potentially ranging between $8 billion and $10 billion.
Analysts at Bank of America warned in a report sent to clients on Tuesday that Qualcomm has made multiple attempts to expand its data center business, and is now once again entering a high-growth but fiercely competitive AI market, where industry giants such as Nvidia, newly emerging Cerebras, as well as Amazon Graviton and Google Axion, among others, are entrenched.
Bank of America analysts said Qualcomm’s data center strategy is expected to generate approximately $2 billion to $5 billion in annual revenue by fiscal years 2027 to 2028.
